Investor Sees Economic Crash in China

[Guest Tony n Terrific]

Excess credit nearly did us in. Now it appears this cycle is going to repeat itself in China. I would hate to be there when 1.3 Billion people are broke. It would not be a day of joy.

 

 

http://finance.yahoo.com/retirement/articl...retire-planning

[Daviation]

I read that article. While there is likely some truth in it, what I find key is that the guy making this call is no China expert. I don't think he's ever been to China and only started studying China about a year and a half ago.

 

I'm often amazed how such "experts" demand respect and credibility. Seems to me that if you've never put shoe leather on the ground... seen how some cities are completely transformed in record time... how can you be an expert.

 

Again, seems there is certainly some truth to the 'credit bubble' discussion. However, I don't see China borrowing from other countries now. All of their funds exist in accounts within their borders. At least at a macro level they are not spending money they don't have.

[Stepbrow]

Well, the article is certainly food for thought. One thing that was stated in the article was that companies often falsely report earnings and growth. Questions that come to my mind are: Can you believe that China's December exports grew by a whopping 17.7% (as reported on Yahoo News this am) ? Who exactly are they selling their exports to? Has any countries sales increased 17.7%?

 

I think that while it is quite probable that China puffs the goods on its economic numbers, I also see that China has great potential for sustained long term growth. They may have bubbles in sectors during their growth, but just look at the population numbers. There are still so many people on the way up looking for a better life. people moving from the country to the cities needing decent housing, tv's, cars, and all the other things we enjoy here in the US.

[Daviation]

There are still so many people on the way up looking for a better life. people moving from the country to the cities needing decent housing, tv's, cars, and all the other things we enjoy here in the US.

 

Along those lines, a statistic etched in my mind is one that noted approximately 30 million people are migrating to the cities from rural areas each year. That is amazing! In just one decade that will almost equal our entire population!

 

In my mind that kind of puts a damper on the theory that China needs us to grow.

[Yuanyang]

There are still so many people on the way up looking for a better life. people moving from the country to the cities needing decent housing, tv's, cars, and all the other things we enjoy here in the US.

 

Along those lines, a statistic etched in my mind is one that noted approximately 30 million people are migrating to the cities from rural areas each year. That is amazing! In just one decade that will almost equal our entire population!

 

In my mind that kind of puts a damper on the theory that China needs us to grow.

Wasn't it after WWII that migration in the USA from farm to city started in earnest? Shifting the population from rural to urban?

[Minister]

Well, the article is certainly food for thought. One thing that was stated in the article was that companies often falsely report earnings and growth. Questions that come to my mind are: Can you believe that China's December exports grew by a whopping 17.7% (as reported on Yahoo News this am) ? Who exactly are they selling their exports to? Has any countries sales increased 17.7%?

 

I think that while it is quite probable that China puffs the goods on its economic numbers...

 

My wife tells me this. I guess a lot of people in China know this. The provinces compete with each other. One says they made 6% growth (probably inflated) and then the next province to report can't be outdone, so they announce 8% growth, and so on and so forth until China is announcing 25% annual growth.

 

Anyway I hear they do this with population too. My wife estimates China's population as more like 900,000,000.

[Bert]

Housing prices are so out of line with reality, the housing market is likely to take tumble at some point. Couple that with the government toying with the idea of implementing property taxes. If that happens, people won't be able to hold on to two or three houses or more. Also, the government plans to implement index futures to the stock market in a few months. If done wisely, it might help stabilize the market; if dominated by speculators, if could make the fall worse. If the stock market crashes, so will the housing market and the economy. It is built out of a house of cards.

 

There have always been doomsayers. It's all a matter of timing and it is extremely difficult to predict the reversal of a trend. They'll eventually be correct. It's like the guy who goes into the auto parts store and says his car won't start. The sales guy says, "It's your battery." The guy says, "No, I'm out of gas and I need a gas can." The same happens the the next year. This time it was the distributor cap (do those still exits?). The next time it was something else. Finally, the guy comes in again and says, "My car won't start." The sales guy says once again, "It's your battery." The guy replies, "You're right. I need a battery." The sales guy proudly says, "Told ya!"

 

It's a safe prediction to say economy will crash. The trick is knowing when.

[Stepbrow]

I just found out that China has begun to slow down the housing market. So, it appears that the ccp is aware of the hot real estate market and is taking measures to cool things down: http://www.nytimes.com/2010/01/08/business...er=yahoofinance

[GDBILL]

Excess credit nearly did us in. Now it appears this cycle is going to repeat itself in China. I would hate to be there when 1.3 Billion people are broke. It would not be a day of joy.

 

 

http://finance.yahoo.com/retirement/articl...retire-planning

 

Too bad the excess credit in China doesn't trickle down to the people. For large companies -- often state-owned -- it is easy to get credit. For the ordinary citizen it is not easy at all.

[knloregon]

the worker in migration (to the cities) is a reversal of the out migration at the time the recession hit. In round figures, 200/230 million rural workers who have additional skills come and go as the economy warrants. 30 million returning to the cities suggests a economic up turn.

 

China, (and most western sources --- including the WSJ) have actually INCREASED --- not decreased their estimates of China's GPD in the last year....

[b.c]

I read that article. While there is likely some truth in it, what I find key is that the guy making this call is no China expert. I don't think he's ever been to China and only started studying China about a year and a half ago.

 

I'm often amazed how such "experts" demand respect and credibility. Seems to me that if you've never put shoe leather on the ground... seen how some cities are completely transformed in record time... how can you be an expert.

 

Again, seems there is certainly some truth to the 'credit bubble' discussion. However, I don't see China borrowing from other countries now. All of their funds exist in accounts within their borders. At least at a macro level they are not spending money they don't have.

 

Right on. Nor was he an expert in the energy business, fast food industry and so on. But what he does seem to excel in is finding entities that are cooking the books and are ripe for fall.

 

With that being said, I have the utmost confidence in the opinion of Jim Rogers. I think the conditions are there for this to play out sometime in the future, but I think China has a fairly solid footing now and has plenty of good years ahead before this happens. His call might be even more premature than Greenspan's infamous 'irrational exuberance' call.

[a2784]

I read that article. While there is likely some truth in it, what I find key is that the guy making this call is no China expert. I don't think he's ever been to China and only started studying China about a year and a half ago.

 

I'm often amazed how such "experts" demand respect and credibility. Seems to me that if you've never put shoe leather on the ground... seen how some cities are completely transformed in record time... how can you be an expert.

 

Again, seems there is certainly some truth to the 'credit bubble' discussion. However, I don't see China borrowing from other countries now. All of their funds exist in accounts within their borders. At least at a macro level they are not spending money they don't have.

 

Right on. Nor was he an expert in the energy business, fast food industry and so on. But what he does seem to excel in is finding entities that are cooking the books and are ripe for fall.

 

With that being said, I have the utmost confidence in the opinion of Jim Rogers. I think the conditions are there for this to play out sometime in the future, but I think China has a fairly solid footing now and has plenty of good years ahead before this happens. His call might be even more premature than Greenspan's infamous 'irrational exuberance' call.

 

You are probably right about this but at least his is only going to cash in on the irrational exuberance and not also be a big part of the reason and the subsequent fall.....

[knloregon]

"...Still, betting against China will not be easy. Because foreigners are restricted from investing in stocks listed inside China, Mr. Chanos has said he is searching for other ways to make his bets, including focusing on construction- and infrastructure-related companies that sell cement, coal, steel and iron ore...."

 

 

"...steel and iron ore...." OUCH ~ !

 

Today's WSJ: "CHINA'S GROWING HUNGER FOR STEEL DOMINATES SECTOR" "Rising Production Looks Unlikely to Exceed Demand, Propelling Prices Higher World-Wide for Raw Materials"

 

Not a good call...

 

Meanwhile also today: (WSJ) "CHINA'S EXPORTS TURN UPWARD IN DECEMBER" "Jump of 18% Marks the End of More Than a Year of Declines; Imports Also Soar; Fueled by the Country's Stimulus Programs"

 

Also not a good call.......

[Guest Tony n Terrific]

China economy is booming right now. Here is a video explaing the buying enthusiam that is going on there now. Things we have taken for granted as necessisties that we use every day are just coming in use in China.

 

http://money.cnn.com/video/news/2010/01/11...umers.cnnmoney/